Every Word Counts

Every Word Counts takes a fresh look at how media & entertainment are evolving, small businesses, and how technology is changing the way we communicate, digest information, and come together in common spaces. The views expressed here are of the authors', not any client or other party.

Margrethe Vestager is not a household name, but the European Commissioner for Competition has been the subject of much attention since announcing formal charges against Google for allegedly violating EU competition laws. The announcement came days after Clifford Chance sponsored and hosted a panel on the role of politics in antitrust enforcement. This post contains analysis from several experts. The panel is one in a continuing series of events that will feature leading voices offering their opinions on top policy issues in media and technology, antitrust, data and international affairs.

Briefing: US-EU Outlook for Antitrust, Merger and Data Policy

Clifford Chance sponsored and hosted a panel discussion, “The US-EU Outlook for Antitrust, Merger and Data Policy," at the firm’s DC office recently, presented by Hammer Strategies. Timothy Cornell, head of Clifford Chance’s US antitrust practice spoke about the interplay between politics and antitrust enforcement in the US and the EU, providing several historical examples. Seth Bloom, President and Founder of Bloom Strategic Counsel PLLC, predicted that the Republican majority House and Senate will continue to take a vigorous look at FTC and DOJ antitrust policies, and major enforcement cases. And Grégoire Poisson, managing director of Interel Group in Brussels, provided an overview of the new European Commission and policy and politics in the EU toward technology companies, data, intellectual property and trade. Andrea Glorioso, Counsellor for the Digital Economy at the Delegation of the European Union to the USA, attended the event, and spoke about the perceived and real role of politics in various EU policy discussions. Ben Hammer, founder and principal of Hammer Strategies, moderated the panel.

The Political Influence in US and EU Antitrust Enforcement, Timothy Cornell

George Bernard Shaw is credited for the maxim: "England and America are two countries separated by a common language."The same could be said of antitrust enforcement on this and the other side of the pond — While the two countries have much in common, there are also a multitude of nuanced differences.One of the more interesting areas where these differences arise is the role that politics can play in antitrust enforcement.

Historically, politics have been more likely to influence antitrust enforcement in the US than in the EU.The Juncker Commission is still in its infancy and how much of a role politics will play in future EU antitrust cases is yet to be determined.Those at the agencies will, understandably, deny any political influence.But while no concrete facts can prove or disprove the role politics play in antitrust enforcement, we can infer that they do have some measurable effect.

The government’s prosecution of Microsoft is one example.Leading up to the case, strong political pressure came from Congresspersons in California and Utah, where major competitors of Microsoft resided.Another instance was the merger control review of the US Airways – American Airlines merger.Initially, the Antitrust Division characterized that transaction as raising significant concerns and likely to either require substantial divestitures or be challenged by the agency.As political pressure to approve the deal mounted — looking at just one state's campaign for clearance, Oklahoma AG Scott Pruitt implored the Justice Department to drop the lawsuit and, a day later, Oklahoma’s entire congressional delegation sent a letter to Holder expressing support for the deal — theAttorney General appeared to push for clearance. It went through with limited divestitures at just two airports.

Presidential influence in antitrust enforcement is also an accepted reality. When Lyndon Johnson was president, The Houston Chronicle endorsed Richard Nixon instead of Johnson.When the Houston National Bank — which was owned by the same person that owned The Houston Chronicle — sought merger control approval shortly thereafter, the Johnson Administration told the Chronicle to reverse its support for Nixon or the deal would not be approved.They did and it was.Similarly, President Nixon threatened to fire AAG for Antitrust Richard McLaren if he continued to challenge the merger of ITT, a significant contributor to the Nixon campaign, with a competitor. The matter settled shortly thereafter and the merger proceeded.

Trust and Politics a Key Factor in EU Discussions of Technology, Grégoire Poisson

In Brussels, conversations around digital and technology have become increasingly emotional and political.This shift was triggered mainly by the Snowden revelations over the massive surveillance of European citizens, including German Chancellor Merkel.

This has fundamentally changed the context of discussions around technology in Europe and placed trust as the dominant theme. The trust conversation has focused on a sub-set of particularly sensitive issues including privacy, cybersecurity, data protection and intellectual property.

The backlash against intelligence agencies, particularly the USA’s National Security Agency and the UK’s Government Communications Headquarters continues – and this has had a negative impact on the ability of US companies to sell into a number of European public sector markets, including Germany and France.

The recent high profile cyber-attacks (against IBM and Ebay or Sony Pictures Entertainment) have pushed the issue higher up the political agenda.

Data transfer will have to be put on the Transatlantic Trade and Investment Partnership (TTIP) negotiating table. To secure an agreement, US politicians will want to see that they have the backing of the largest sectors, including technology.

The European Commission has vowed to re-examine copyright law in the name of improving the Single Market, with draft recommendations to be made within six months. As technology companies increasingly turn to IP litigation to secure market share, the policy framework will be a core issue for multinational companies looking to innovate and national governments looking to protect domestic industry.

The new European Commission is more political than the previous one:a more centralised and integrated decision-making power and a multiplication of key actors, including Margrethe Vestager, Commissioner in charge of competition, who is not afraid of starting a fight with tech giants.

The most successful companies in Brussels are those who can show full sync with Juncker’s political goals while keeping the conversation flowing with national competition authorities.

Despite the Republican takeover of the Senate, there will likely be substantial continuity with respect to antitrust issues in the 114th Congress.Antitrust issues in the Senate are frequently conducted in a bipartisan manner with hearings, letters to regulators, and sometimes even legislative initiatives being conducted jointly.This tradition – which also existed during the 16 years Sen. Kohl was Chairman and Ranking Member of the Committee before his retirement in 2012 – is important to building bipartisan consensus for antitrust enforcement.We saw this bipartisan cooperation in the last Congress when Sen. Klobuchar was Chairman and Sen. Lee was ranking member.They wrote letters about pending mergers jointly and conducted hearings in a cooperative manner.Both Sen. Lee, now the Chairman of the Antitrust Subcommittee, and Sen. Klobuchar highly value working together in a bipartisan manner.

Further, while Sen. Lee is a strong conservative, he takes antitrust very seriously and recognizes its importance to preserve the proper functioning of a free market.His touchstone is consumer welfare, and believes that the goal of antitrust enforcement must be to serve consumer welfare.He has already held a comprehensive hearing on the ASCAP/BMI consent decree and whether reforms are necessary to that decree.It is likely that the Antitrust Subcommittee under his leadership will continue to take a leading role in examining mergers in key industries.In addition, Sen. Lee has announced an inquiry into the FTC’s decision to close the Google investigation in light of the FTC’s inadvertent release of a Bureau of Competition staff report recommending the filing of an antitrust lawsuit against Google.

In the House of Representatives, there was no change in party control and the Republicans continue to chair the Antitrust Subcommittee.It is likely their priorities will continue to include legislation to harmonize FTC and DOJ antitrust enforcement procedures, the Smarter Act, which passed the House Judiciary Committee last Congress.In addition, it is likely they will continue to support measures to more precisely define the FTC’s antitrust authority under section 5 of the FTC Act.Both of these initiatives had slim prospects for being enacted in the last Congress when the Senate was under Democratic control, but have significantly improved chances in the current Congress now that Republicans control the Senate.